FEARS mounted over the outlook for manufacturers in Wales yesterday as the industry’s expectations for future output hit the lowest level for more than a year.

The CBI Industrial Trends Survey for November revealed a balance of 9% of manufacturers expect output in the next three months to fall - the worst result since October 2011.

However, there was some hope as companies reported an improvement in export orders, with a balance of 12% reporting a drop, compared with 22% in October.

This was driven by sectors including mechanical engineering and transport equipment, the CBI said.

The chemicals sector - the largest export sector in the survey - reported a sharp drop.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “It is evident that manufacturers still face a tough environment.”

Survey results for the total order book remained broadly flat this month, with a balance of 21% reporting a drop in orders.

There was bad news for the Bank of England as a balance of 8% of manufacturers expect to increase prices charged at the factory gate, signalling further pressure ahead on the rate of inflation.

Anna Leach, CBI head of economic analysis, said: “Business confidence continues to be undermined by uncertainty over events in Europe and the fast approaching US fiscal cliff. However, we expect UK growth to pick up somewhat in 2013 as this uncertainty gradually subsides and global growth increases.”

The whole economy returned to growth in the third quarter of the year when gross domestic product rose by 1%. However, experts warned the rebound was driven by one-off factors and the underlying picture is much weaker.

Last week, Sir Mervyn King said it was possible the economy could shrink again in the final three months of the year, following a run of weak surveys covering the manufacturing, services and construction industries.

Meanwhile, yesterday, in a hearing with the Parliamentary Commission on Banking Standards, he said the investment banking industry was seeing a “new generation of leadership”.

But the governor, who will step down in just over seven months, said proposals to introduce ring-fences to protect high-street operations from investment divisions was still necessary.